Pay on the basis of individual performance or group's ? Not individuals. Organize your people into a group.
If you want a person to work harder, you should offer to pay on the basis of individual performance, right? Not usually. A large body of research suggests it's best to motivate groups, not individuals. Organize your people into a group; reward everybody when the group achieves its goals. Susan Helper, Morris Kleiner and Yingchun Wang confirm this insight in a working paper for the National Bureau of Economic Research. They compared compensation schemes in different manufacturing settings and found that group incentive pay and hourly pay motivate workers more effectively than individual incentive pay.
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Joachim Huffmeier and Guido Hertel tried to figure out why groups magnify individual performance for a study in the Journal of Experimental Social Psychology. They studied relay swim teams in the 2008 Summer Olympics. They found that swimmers on the first legs of a relay did about as well as they did when swimming in individual events. Swimmers on the later legs outperformed their individual event times. In the heat of a competition, it seems, later swimmers feel indispensible to their team's success and are more motivated than when swimming just for themselves.
Not all groups perform equally well, of course. Researchers led by Thomas W. Malone at the Massachusetts Institute of Technology Sloan School of Management have found they can measure a group's I.Q. This group I.Q. is not well predicted by the median I.Q. of the group members. Measures of motivation didn't predict group performance all that well either.
Instead, the groups that did well had members that were good at reading each other's emotions. They took turns when speaking. Participation in conversation was widely distributed. There was no overbearing leader dominating everything.
OPINION
Social Science Palooza II
By DAVID BROOKS
Published: March 17, 2011
A sampling of recent research tries to understand the ties that bind.